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Our NewsletterIssue No. 41: PBMs Under Attack
An Administration Proposal Seeks to End an Opaque and Complex System That Drives Higher Prices and Denies Benefits to Patients It’s a good bet that most Americans have not the slightest idea what pharmacy benefit managers (PBMs) do, yet these companies have an enormous impact on what we pay for drugs. Now, the Trump Administration is moving to reform an opaque system in which PBMs drive higher list prices and keep rebates out of the hands of patients who deserve them. As the Washington Post put it, “That rebate is not always passed on to consumers -- instead, it's mainly being pocketed by the insurers and the PBMs, a dynamic that prompts drugmakers to push prices even higher.” Since rebates are proportions of list prices, the higher the list price, the more the PBM makes. This perverse incentive can, for example, discourage the use of biosimilar drugs, which are almost identical copies of more expensive biological products. Biosimilarsapproved by the Food & Drug Administration (FDA) must have “no meaningful differences in efficacy, safety, and purity” from a patented FDA-approved reference biologic. Their uptake has been hampered in the United States, in large part by the preferences of PBMs, which score greater rebates from biologics. (More on the biologic “rebate trap” below.) Read more here. |
What Others Are Saying"The anger directed at the pharmaceutical and biotech industries overall is misdirected. The single biggest driving force for increased health-care spending in the U.S. is the rising cost of labor, not drugs." "Even if pharmaceutical spending were rising as a share of total health care spending, but that rise was due to pharmaceutical investments driving down expenditures in other health care areas (e.g. a reduced need for more expensive surgeries), then it would still be inaccurate to argue that pharmaceutical spending is driving overall health care inflation." |
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